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Financial Stress, Comfort and Bliss

Written by David Bloom

Life contains many challenges: finding love, having a family, creating a career, dealing with relationships, and so on. One of the biggest challenges is managing your financial wellbeing. The difference between living paycheck to paycheck and having a sound net worth is a life changer. Money may not buy happiness, but it certainly can lower the stress temperature. Unless you have a degree in finance or business it is unlikely that you have learned how to obtain financial freedom. Over the last 35 years spent advising clients on their financial health, I have made some simple observations that might help you.


Like anything in life, if you want to be successful you need to work at it. Even if you have natural talents, genetics, or family wealth, you still need to work at it. You need to set goals, plan, and work the plan. For example, to stay in good physical shape, you would be better served having an exercise program, a nutrition plan, and regular doctor checkups. Following this plan will put you in better physical condition than not following the plan. The same applies for financial health. You must set goals, enact an action plan, and find a good financial advisor and commit to regular checkups. This will set you on a good path to better financial security and independence.

Pay yourself first

This is a simple but tried and true tip that works. Take 10% (or some other percentage that works for you) from your income and put it away in a savings vehicle. I like RRSPs for their tax savings element, and it is more difficult to go in and use these funds for something else. If you start earlier in your career, it is easier but it’s never too late to start. If you are bit further in your career start by putting the next raise in the savings plan.

Absent this type of savings, I often see people grow into their incomes. What I mean by this is that no matter what your income is, without some forced savings discipline, you end up finding things to spend your money on. Then one day you face retirement only to find that you need a part time job to support your lifestyle.

Smart buying

Buying smart does not mean being cheap, it means being wise with your spending. Folks with long-term, sustainable wealth are frugal. They analyse buying decisions carefully, weighing the quality, durability, need and cost in all of their purchases. They typically buy what suits their needs best regardless if they could afford a much more expensive product. There is a great book on this concept called the Millionaire Next Door; The Surprising Secrets of America’s Wealthy by Thomas J. Stanley Ph.D and William D. Danko Ph.D. This book is a great read for folks starting their working careers.

Use tax strategies

The federal government wants you to save for retirement and education and to aid with this, they have developed savings vehicles to help you accumulate wealth. Registered Retirement Savings Plans (RRSPs) allow you to put 18% of your earnings into a savings/investment account. You get a deduction on your tax return for the contribution and the income grows in the plan tax free. When you take the money on retirement, you must pay tax then, perhaps at lower tax rates, but it is a great way to save. Tax Free Savings Accounts (TFSAs) are similar vehicles to RRSPs. You put money into these plans, but you don’t get a tax deduction for the contributions. The money grows tax-free and when you take the money out you are not taxed. Registered Education Savings Plans (RESPs) are savings and investment accounts which provide for your children’s’ education expenses. When you put the money in, there is no tax deduction. However, the earnings accrue tax-free. As well the government matches the contribution you make to the plan, up to $500 per year. That’s free money! When the money is withdrawn it is taxed in the hands of the children, who have a lower tax rate and likely are entitled to tuition and education tax credits to offset the taxable income inclusion. Following these tips will set you on a better financial path. Those that plan by buying lotto tickets or hoping that Uncle Richey Rich will leave a nest egg in his will might end up okay in the long run but they won’t lower their financial stress in the present day.

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